“Free Markets and “Free Trade” = “Elite Propaganda” – Part XIV

Disraeli in a speech on 1st February 1849 cruelly dissected this insanity:

There are some who say that foreigners will not give us their production for nothing, and that therefore we have no occasion to concern ourselves as to the means and modes of repayment. There is no doubt that foreigners will not give us their goods without exchange for them; but the question is what are the terms of exchange most beneficial for us to adopt. You may glut markets, but the only effect of your attempt to struggle against the hostile tariffs by opening your ports is that you exchange more of your own labour each year for a less quantity of foreign labour, that you render British labour less efficient, that you degrade British labour, diminish profits, and, therefore, must lower wages; while philosophical enquirers have shown that you will finally effect a change in the distribution of the precious metals that must be pernicious and may be fatal to this country. It is for these reasons that all practical men are impressed with a conviction that you should adopt reciprocity as the principle of your tariff – not merely from practical experience, but as an abstract truth. This was the principle of the commercial negations at Utrecht – which were followed by Mr Pitt in his commercial negotiations at Paris – and which were wisely adopted and applied by the Cabinet of Lord Liverpool, but which were deserted flagrantly and unwisely in 1846″. (The fall of Protection pp 337/8″).

Ironically, the ‘free traders’ make the same general errors as Marxists. They believe that everything stems from economics. For the neo-liberal the market has the same pseudo-mystical significance that the dialectic has for the Mar ist. Just as the Marxist sees the dialectic working inexorably through history to an eventual state of communism (or a reversion to barbarism to be exact), so the neo-liberal believes that the market will solve any economic problem and most social ills. Neither ideology works because it ignores the reality of human nature.

The one-track economic mentality of the early ‘free traders’ is well represented by the father of J S Mill, James Mill:

The benefit which is derived from exchanging one commodity for another arises from the commodity received rather than the from the commodity given. When one country exchanges, or in other words, traffics with another, the whole of its advantage consists of the commodities imported. It benefits by the importation and by nothing else. A protecting duty which, if it acts at all, limits imports, must limit exports likewise, checking and restraining national industry, thus diminishing national wealth.” (The fall of protection p 174).

And to Hell with any social or strategic consideration or changing economic circumstances.

After the Great War and the fall of ‘free trade’ as public policy in 1931, the religion went underground for nearly 50 years. When it re-emerged as a political idea in the 1970s the politicians who fell under its spell were every bit as unquestioning and credulous as those of the 1840s. Tony Blair’ statement on Globalisation, ie, free trade, at the 2005 Labour Party Conference shows that it is alive and kicking today.

Scorning any attempt to discuss Globalisation, Blair said of those who wished to oppose : “You might as well debate whether autumn should follow summer.” (Daily Telegraph 1 10 2005.)

None of this would matter very much now if those who believe in ‘free markets’ and ‘free trade’ were without political power. Unfortunately, theirs is the elite ideology of the moment and the past 25 years. In Britain, the Tories may be more fanatical in their devotion to the market as panacea, but Blairite Labour have caught more than a mild dose of the disease. A good example of this is their response to house price hyperinflation where they desperately and futilely attempt remedies within the constraints of what they perceive to be ‘free market’ disciplines rather than opting for the obvious state generated remedies such as restricting immigration, building a great deal of social housing and forcing developers to release land for building.

Both the traditional Left and Right have been duped by globalisation. The Left initially welcomed globalisation as a dissolver of national sovereignty, but they are discovering by the day just how restrictive international treaties and membership of supra-national groups can be. As things stand, through our membership of the EU and the World Trade Organisation treaties, no British government could introduce new socialist measures because they cannot nationalise companies, protect their own commerce and industry or even ensure that taxpayers’ money is spent in Britain with British firms. A British government can have any economic system they like provided it is largely free trade, free enterprise.

[The final part of this series will be published tomorrow on UKIP Daily]

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2 Comments

Michael Keal
on August 26, 2018 at 6:57 pm

“As things stand, through our membership of the EU and the World Trade Organisation treaties, no British government could introduce new socialist measures because they cannot nationalise companies, protect their own commerce and industry or even ensure that taxpayers’ money is spent in Britain with British firms. A British government can have any economic system they like provided it is largely free trade, free enterprise.”

How does this fit in with Direct Capitalism? By this I mean the phenomenon whereby state-owned companies trade on the world’s markets acting as if they were privately owned companies.

The quote above tells us that a government is not free to nationalise (seize control of a privately-owned company) but it does not tell us if a government can simply establish a company of it’s own, and using it’s power to print money, simply outcompete and bankrupt a rival company.

I say this because from what I understand, in China, there are few, if any, privately-owned companies and the state directly owns virtually it’s entire economy and is currently buying up resources and companies across the globe which it, as a country, then owns.

If my guesswork is entirely, or even only partially correct, it answers a question I once had as a boy, in the sixties. What would happen if the Marxists discovered capitalism?

More prosaically, as things now stand, in terms of international treaties and so-called trade deals etc. would a British government be allowed to place restrictions on, or take punitive action against, companies owned or otherwise controlled directly by a foreign government on the basis that they are not a commercial enterprise?

I’m asking because to me it seems likely that a company that operated in Britain but was owned by another country might be expected to act in that country’s interest and at times against the UK or another UK company if told to do so by its owner.

Jake Bennett
on August 26, 2018 at 2:57 pm

The unparalled economic success of Hong Kong and Singapore may be held up as proof that free trade and free markets can bring wealth and prosperity to most of its citizens. ‘Positive non-interventionism’ has been central to their economic success – ‘laissez-faire capitalism’ if you like. In reality though, there is much government involvement in the economies of these two former empire outposts. Wikipedia states “….. the government is involved in the economy, some of which exceed the degree of involvement in other capitalist countries. For example, the government is involved in public works projects, healthcare, education, and social welfare spending. Further, although rates of taxation on personal and corporate income are low by international standards, unlike most other countries Hong Kong’s government raises a significant portion of its revenues from land leases and land taxation. All land in Hong Kong is owned by the government and is leased to private developers and users on fixed terms, for fees which are paid to the state treasury. By restricting the sale of land leases, the Hong Kong government keeps the price of land at what some consider as artificially high prices and this allows the government to support relatively some public spending with a low tax rate on income and profit”. The same could be said of Singapore.

Far from suggesting that Britain adopt this economic model it does go some way to prove that this economic model can work for a particulare type of small country (enjoying the rule of law) if not for mature economies such as ours. It would be foolish though to dismiss outright that there is nothing we can learn from their economic success.

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